Based on the information you provided, among other things, the Bank
places funds for its stockholder banks, other banks, savings and loan
associations and credit unions. You note that the great majority of the
deposits placed by the Bank are with banks in the State of ***.

As we discussed by telephone recently, the definition of deposit
broker is very broad. The term "brokered deposit" is defined in
section 337.6(a)(3) of the FDIC's regulations as "any deposit that
is obtained directly or indirectly, from or through the mediation or
assistance of a deposit broker." The definition of "deposit
broker," found in both section 29 of the FDI Act and section 337.6
of the FDIC's regulations, encompasses the Bank's activity. The
pertinent part of that definition is: "any person engaged in the
business of placing deposits, or facilitating the placement of
deposits, of third parties with insured depository
institutions. . . ." Unless the activity in question comes within
one of the statutory or regulatory exclusions, the FDIC must consider
the activity deposit brokering.

In our opinion the Bank's practice of placing deposits does not come
within any of exclusions from the definition of deposit broker. We
believe Congress' intent in defining "deposit broker" so broadly
was to control the flow of brokered funds to all but the best
capitalized depository institutions insured by the FDIC. If, for
example, the banks with which the Bank places deposits are "well
capitalized" (as defined in section 337.6(a)(10) of the brokered
deposits regulation) then treating the Bank as a deposit broker would
not impede the placement of the brokered funds with those banks.
Conversely, if the banks are not well capitalized then the other
limiting provisions of the regulation would apply. We believe this
interpretation is consistent with the literal and intended meaning of
section 29 of the FDI Act.

We hope this response has been helpful. Feel free to contact us with
any other questions or comments on this matter. My telephone number is
(202) 898-7349.